JBK, Inc. normally pays an annual dividend. The last such dividend paid was $2.50, all future dividends are expected to...

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JBK, Inc. normally pays an annual dividend. The last such dividend paid was $2.50, all future dividends are expected to grow

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Answer 1

Answer #1

Price of share after one year = Dividend/(Required Return - Growth Rate)

=2.50(1.05)^2/(11%-5%)

= $45.9375

Stock Price today is equal to present value of future dividends

= (17+45.9375)/(1.11)

= $56.70

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Answer 2

Answer #2

DIV=2.5(1.05)^2

p= 2.5(1.05)^2 /0.11-0.05

= 45.938

P0= 45.938 + 17/1.11= 61.25

answered by: Ayyas

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Answer 3

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